"The freight market has been soft for almost a year, and in our view, slid into freight recession in the first half of 2019. The U.S. trucking industry faces a supply and demand imbalance – excess equipment capacity and not enough freight – which continues to press rates lower" (DAT).

The first half of 2019 could be described as a "shipper's paradise and a carrier's nightmare." Here's our take on some transportation market trends we're seeing from our Logistics Control Center -- and what to expect going forward.

Demand for trucks has decreased year over year.

US importers stockpiled imports in late 2018 ahead of the threatened US/China trade war and 25% tariffs. This lowered 2019 volume as a result.

The overall economy has leveled off in part due to the trade war and uncertainty about global trade.

Supply of trucks has increased year over year.

The market flooded with new carriers and drivers in 2017. In 2018, these carriers and drivers sought to take advantage of unprecedented high spot rates that were 20-30% above the previous year.

In 2019, we’ve avoided significant disruptors (natural disasters, fracking, etc.) of truck supply that we’ve seen in years past.

A combination of softer demand and an abundance of trucks has led to low rates.

2018 contract rates that were 10% higher year over year have expired. New negotiations have not typically yielded rate increases. On the contrary, we're seeing decreased contract rates.

Through the first half of 2019, spot rates (including those during spring produce season) have been 20% lower than this time last year.

LeanCor is receiving more calls from asset-based carriers initiating contract business conversations.

What to expect moving forward...

The market cannot sustain such low rates much longer. The spot market is cyclical and we believe it has bottomed out in the current cycle. Large and small carriers are going out of business due to low spot rates which are quickly reducing the supply of trucks.

Shippers using mostly asset carriers and contracted rates that are re-negotiating annual pricing in Q2 or Q3 should be in good shape through next spring.

“We just completed a major RFP and are seeing significant reductions from some of the best-known asset based carriers. It is not just a reduction in the spot-market rates from brokers" (Morgan Stanley Truckload Sentiment Survey (TLSS) Respondent Commentary).

Shippers that continue to take advantage of cheap spot rates at the expense of asset carriers and contract rates could experience double digit rate increases in late 2019 if a few things fall into place:

Trade agreement between US and China: Not only would this increase container traffic, it would boost the US economy currently holding its breath awaiting an outcome.